Psychological Aspects of Market Crashes
AbstractThis paper analyzes the sensitivity of market crashes to investors'psychology in a standard general equilibrium framwork. Contrary to the traditional view that market crashes are driven by large drops in aggregate endowments, we argue from a theoretical standpoint that individual anticipations of such drops are a necessary condition for crashes to occur, and that the magnitude or such crashes are poritively correlated with the level of individual anticipations of drops
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Bibliographic InfoPaper provided by Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n1730407.
Length: 23 pages
Date of creation: 2007
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-09 (All new papers)
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